Microsoft is trying to unseat leaders in search, ultrabooks, tablets, and smartphones. Where the Windows maker excels is milking Windows and Office for high profits. Where it fails is nearly everywhere else.
How Microsoft Can Win (again)
Microsoft has options and resources, and the road is easier viewed than traveled, but certain rules can be applied to any effort to unseat a market leader.
Google is the market leader is search; both usage and revenue. Microsoft’s search engine, Bing, isn’t bad, in some ways is better, but it’s not sufficiently differentiated.
To topple a leader, a new, competing product must be notably better and priced about the same or less. Or, about the same as the leader in features and usage, but priced much less.
Use Apple’s iPhone as an example. It was priced competitively, but provided an interface and usability that far exceeded smart phones from Microsoft, Motorola, RIM, and others.
Within a few years, while competition languished, the iPhone became the industry leader in unit sales, revenue, and profits, while most of the competition floundered, Microsoft included.
Apple’s success in notebooks and ultrabooks is noteworthy as the competition focused on low quality and low margins, while the Mac maker differentiated the MacBook line with higher quality (light, thin, long battery life), and an operating system that was both simple to use, powerful, and more secure than Windows.
Apple’s notebook line is successful; growing in market share, units sold, and claims the top spot in revenue and profits. Apple has similar success in the tablet market, leading in unit sales (market share), revenue, and profits, while most of the competition struggles.
Microsoft’s executives are not stupid and they know the trend in ultrabooks, smart phones, and tablets is not in their favor. How can Microsoft topple Apple? One of the answers so far has been an attractive new Windows Phone OS which hasn’t sold well. Why not? Insufficient differentiation in software, usability, hardware, price or ecosystem.
What about Microsoft’s much ballyhooed Surface tablet-cum-ultrabook, the Surface with Windows RT or Windows 8? The high end version, which would compete with Apple’s MacBook Air line, has yet to debut. What about the Surface tablet? Microsoft positioned the low-end Surface as a Frankenstein-like product, with pieces from everywhere.
Windows RT is not Windows 8, so the number of available apps pales in comparison to apps for the iPad. The keyboard appears attractive, but tablet users seem to shun keyboard usage. The Surface appears attractive, with touch screen, kickstand, and keyboard, but is priced like an iPad, but with less usability.
While the iPad remains comfortable for users in either landscape or portrait mode, depending upon the app used at the time, Microsoft’s Surface, like Amazon’s Kindle Fire HD, and Google’s Nexus tablets, focuses more on landscape mode for content consumption.
Despite spending billions to compete with Apple’s roaring successful iPhone and iPad, Microsoft reports modest sales of the Surface, and seldom mentions Windows Phone sales. In fact, Amazon and Google never report sales numbers of their respective tablets and smart phones. That’s not an indicator of success.
If Apple is the market leader in smart phones and tablets with iPhone and iPad (with iOS and the ecosystem), a competitor, whether Microsoft, Amazon, or Google, must provide a similar product and experience at a much lower price, or a far better product and experience at about the same price. That’s how incumbents are unseated.
The Surface with Windows RT does not compete well, hence sales numbers are modest. Both Amazon and Google have attempted to disrupt Apple’s success with competing products which are lower in price and quality, but similar in functionality. Success remains to be seen, but there’s a reason both companies do not report their sales numbers. The true numbers would be embarrassing.